After probing from the the Hong Kong Securities and Futures Commission (SFC), an official from cryptocurrency exchange JPEX has been arrested, further leading to the suspension of the platform’s trading services.
Per the SFC, the inquest into the Hong-Kong-based exchange stems from allegations that it’s been operating without a licence. More specifically, this allegation is rooted in the belief that JPEX’s claims of being licensed by securities authorities in Australia, as well as having registration with the US Financial Crimes Enforcement Network (FinCEN) as a Money Services Business (MSB), are false.
Additionally, police authorities have recently received 83 JPEX-related complaints, with the now-detained official being suspected of digital asset fraud worth around HK$34 million ($4.3 million).
Just days before the investigation began yesterday, the financial watchdog warned JPEX investors to exercise with caution whilst on the platform, as it stated that JPEX was advertising returns on savings products that were ‘too good to be true’. This latter point then links to JPEX’s woes going international, as its Taipei (Taiwan) office was recently vacated amid investigations of its use of Taiwanese influencers to promote its seemingly unrealistic offerings.
As part of the investigation, authorities have asked JPEX for more information for negotiation purposes, which in turn, has restricted its liquidity and ‘significantly’ increased its daily operational costs. Here, many users have had trouble withdrawing assets from their accounts, as new trades have been frozen (whilst existing ones will remain effective until they’ve matured).
Additionally, JPEX’s booth at crypto’s flagship conference ‘Token2049’ last week was said to be abandoned after the first day.
The Platinum sponsor, JPEX, abandoned their booth at #Token2049 on the second day. ????
— J O Y (@joyxspacelatte) September 14, 2023
On a side note, their logo looks quite similar to FTX. Is that a sign? ???? pic.twitter.com/KZw9o5vNgF
Interestingly, JPEX has publicly responded to its shutdown, stating that after ‘unfair treatment by relevant institutions in Hong Kong,’ as well as after a ‘series of negative reviews,’ its ‘partnered third-party market makers have maliciously frozen funds’.
This case comes amid other rampant efforts to dismantle crypto operations across different international jurisdictions. For example, the US Securities and Exchange Commission is working tirelessly to takedown the likes Ripple (XRP) and Coinbase (etc.) - with their bearish onslaught also contributing to crypto lending giant Genesis deciding to halt its trading services.
That being said, if JPEX is found to be an undeniable bad actor, then this story can be nothing but bullish for the DeFi space… as through our recent discovery on how authorities wish to meddle with crypto, a regulated future is perhaps the best outcome for all.
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This article is intended for educational purposes and is not financial advice.
